With an estimated $125 trillion of investment required by 2050 to meet net-zero carbon emissions globally and an objective among countries in the Middle East and North Africa (MENA) region to be at the forefront of the green steel transition, the challenges and opportunities of decarbonizing the industry was a prominent theme at the conference.
Here are the highlights of what we learned at the event.
The only major global steel market with current plans to penalize carbon-intensive steel is the European Union, with the purchase of offsetting certificates required from 2026 for both domestic and imported material through the European Trading System and Carbon Border Adjustment Mechanism (CBAM).
CBAM will incur added costs to imported material directly correlating with its carbon footprint, thereby giving a competitive advantage to low carbon producers in the global market.
The Middle East, with its direct reduced iron (DRI)– and electric-arc furnace (EAF) – based industry, reserves of natural gas and potential for renewable energy production, is well placed to take advantage and become a key supply to the net-importing European market, Fastmarkets heard.
But awareness of the details of the CBAM and the potential advantage Middle Eastern producers hold over traditional suppliers to Europe was not ubiquitous among regional steelmaking executives, some of whom considered any pressures toward decarbonization a hurdle to be overcome instead of an opportunity.
The availability, or lack thereof, of the necessary raw materials for green steelmaking could hinder the decarbonization of the industry, according to the concerns of several participants.
High-grade iron ore, scrap and green hydrogen were all highlighted as materials with question marks over their availability.
High-grade iron ore is essential for DRI production, but attendees questioned where sufficient quantities would be sourced if the global steel industry was to eventually switch away from blast furnace (BF) production.
Scrap is another essential pillar of green steelmaking, but its supply is a mostly fixed product of economic activity that cannot be easily increased. Moreover, exporting regions such as Europe, the United Kingdom, the US and Japan are expected to restrict outflows in the coming years to secure material for domestic production, Fastmarkets heard.
Sources therefore expect the international supply of scrap to significantly tighten.
Green hydrogen — hydrogen that is produced with renewable energy — is another material required if the DRI-EAF route is to become net zero. While powering DRI production with natural gas results in lower emissions than those of coal-based BFs, it remains a fossil fuel.
But producing green hydrogen requires significant investment and massive increases in renewable energy. Steelmakers said they would require governmental support to ease the burden of the capital expenditure necessary for such projects.
Massive construction growth expansion is planned in the region, most notably with projects such as Neom and the 2034 World Cup in Saudi Arabia, which could account for as much as 20% of the global steel supply if fully realized. As a result, appetite for steel in the region is expected to accelerate over the next decade.
Some speakers suggested that the green steel transition and vast economic growth could work in parallel, but other market participants perceived these priorities to be in direct conflict, highlighting already-tight margins and a reluctance among many downstream companies to absorb the cost of decarbonization.
It was argued that the two ambitions could only work in tandem if there were commercial incentives in the regional markets and fast maturation of the very nascent green steel sector.
In its decarbonization strategy, MENA countries can rely on carbon capture storages which can be at least partially based on existing oil and gas infrastructure.
“MENA is the best place in the world for carbon captures,” Rutger Gyllenram, founder and chief executive officer of Swedish metals sustainability firm Kobolde & Partners, said during the event. “The region has dried out wells for natural gas and oil that in some cases can be used for storage according to specialists in the area.”
To transport CO2, existing piping systems may be used or new ones can be built sharing some existing infrastructure, provided the CO2 is reasonably free from detrimental substances such as nitrogen oxides (NOx) and sulphur oxides, he added.
Carbon capture, utilization and storage (CCUS) potential was heard to be one of the region’s competitive advantages in the race to be a global provider of green or reduced-carbon steel, on top of its existing DRI-EAF technology and energy position.
Regulatory oversight and the structuring of incentives for private enterprises and consumers are likely to remain the main engines of growth behind the steelmaking industry’s push toward decarbonization, according to the chief executive officers’ keynote panel.
The importance of government intervention, especially in the transition period, when societies must grapple with the tensions between low-carbon steel and low-cost steel, should not be understated, Saeed Al Ghafri, CEO of Emirates Steel, said at the event.
“Consumer opinion and private industry have not developed to a point where [customers are] ready to embrace the added cost of steel products with a lower carbon footprint, [and are instead] making choices based on cost,” Sharjeel Azhar, CEO of Al-Ittefaq Steel Products, said.
Stronger consumer acceptance of green steel will require broader efforts in public education and further incentives on the part of domestic authorities, according to Rewant Ruia, a director of Essar Group.
Collaborative work across government and research bodies and private steelmakers were touted by conference attendees as a possible measure to spur innovative solutions in reducing the steelmaking industry’s carbon footprint.
Various speakers highlighted the potential synergies and benefits of cross-sector collaborations, creating viable projects with a wider impact on the market.
Raju Daswani, CEO of Fastmarkets and the moderator of the keynote panel, added that it was imperative for governments to structure incentives and regulatory models, as well as collaborative efforts, bearing in mind the long-term benefits for steel producers, and that steel producers must ultimately see value in decarbonizing their supply chains for a meaningful transition to take place.
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